Case Study Analysis: Maintaining Cost Leadership Strategy for Wal-Mart

Running Head: CASE STUDY ANALYSIS 0
CASE STUDY ANALYSIS
student name
4/30/2019

CASE STUDY ANALYSIS 1
Executive summary
Wal-Mart is a retail chain based in the United States and founded by Mr. Sam Walton in 1962. It
is one of the largest chains across the globe. One key problem identified from the case was how
Wal-Mart could maintain cost leadership strategy and gain a competitive advantage in the
industry with good quality products and services. The generic strategy used by the company is
the cost leadership strategy and major elements used by the company to gain cost leadership
strategy were economies of scale, efficient supply chain management, low production costs and
operations, cross docking, identical tags using radio frequency, and technology and logistics.
After identifying the case problem questions and analysing the case elements through various
strategic tools, the solutions to the problem were formed. The Alternative solutions to the
problem identified were training program development, more focus over technological issues,
enhance local brands, focus on salaries of staff, store experience and design, and increase online
presence. After analysing all the alternative solution for Wal-Mart, the most appropriate solution
would be a combination of an increase in online presence and more focus over technological
issues. Promotional activities and online sales promotion, Delivery options, Quick delivery,
Monitoring and control, and Technological updating were some of the recommended action
considered by the company to implement the selected solution.

CASE STUDY ANALYSIS 2
Contents
Executive summary.........................................................................................................................1
Introduction......................................................................................................................................3
Case brief.........................................................................................................................................4
The problem statement, plan of analysis.........................................................................................5
Literature review..........................................................................................................................6
Porter’s generic strategy..........................................................................................................6
Porter’s five-force model.........................................................................................................8
SWOT Analysis.......................................................................................................................9
Sources of data...........................................................................................................................10
Analysis & Findings......................................................................................................................11
Wal-Mart’s generic strategy......................................................................................................11
Wal-Mart’s porters five force model.........................................................................................13
SWOT analysis of Wal-Mart.....................................................................................................15
The proposed solution to the problem...........................................................................................17
Alternative solutions to the problem..........................................................................................17
The best solution selected for the problem................................................................................19
References......................................................................................................................................22

CASE STUDY ANALYSIS 3
Introduction
Wal-Mart is a retail chain based in the United States and founded by Mr. Sam Walton in 1962. It
is one of the largest chains across the globe. The research report will analyse the case of Wal-
Mart to understand the problem faced by the company and the relevant solution to the problem.
The research objective is to understand the Wal-Mart business and relevance to understand the
ways through which the company would sustain with a similar position in the industry (walmart,
2019).
The discussion further will include the problem statement. From the Wal-Mart case and how the
case would be analysed. Moreover, the key findings from the case would be discussed along with
the proposed solution to the identified problem (Baker & Bowen, 2015).

CASE STUDY ANALYSIS 4
Case brief
Wal-Mart major strategy is to be cost leadership while providing a good quality product to the
customer around the globe. Another than cost leadership strategy the company strategy is
geographical diversification that is expanding the business in most of the nations and being the
dominating retailer. The founder of the company, Sam has placed this strategy for this company
had the leaders of the company are still following his footsteps to remain competitive. He has
outlined that the major focus of the discount retailing is the maximum possible cut price of the
expenses of the company and increase the sales to a greater extent. This is to enhance the profit
margin and availability of the products to a minimum price for the customers. Another major
element of the strategy of Wal-Mart is unit competitiveness. Every store of Wal-Mart is
motivated to compete against another store to increase the sale of each store based on customer
numbers. This strategy was adopted until the company was able to dominate in the retailing
market over local retailers (Betton, 2017).
Wal-Mart was established in rural areas for placing strategy, as the company was not interested
in providing fancy store, rather the company was interested to reduce the expenses which cannot
be done in case the location is selected to be a fancy urban location. There were rural markets
that were highly populated but the level of living was lower and few employment opportunities
were available. However, the company moves to major cities by 2003, which led to change in
this strategy of the company and the company initiated 50 stores in the US. The internal and
external appearances of the store appearance were uniform in nature. The company has still
managed to keep the expenses very low as compared to its competitors (Brown & Dant, 2014).

CASE STUDY ANALYSIS 5
One key problem identified from the case was how Wal-Mart could maintain cost leadership
strategy and gain a competitive advantage in the industry with good quality products and
services. It was observed that the company is willing to pursue a lower price strategy. The major
pros for this strategy continuation included that for everyday shopping or grocery shopping,
people are very price sensitive regardless of the income group they belong to. This is the major
cause that led the company to adopt this strategy instead of merchandising uniqueness. However,
the cons of this strategy are that this could be challenging with a change in environment and
consumption patterns. For instance, Low-income group are pressurized to reduce the purchasing,
as they would influence highly by the prices increasing or economic downturn. Therefore, the
company has to anyhow maintain lower prices to gain customers and do not loose low-income
consumers (Bruns, 2013).
The problem statement, plan of analysis
As already discussed, the problems identified from the Wal-Mart case includes the generic
strategy used by the company. Through cost leadership strategy, the company is offering large
goods variety to the customers at the lowest possible prices and still able to maintain the profit
for the company. Even if the company increases the price of services and goods like grocery
items, the company decreases the price of other elements associated with the company like
technology in order to keep the customers pursue shopping from the store (Chari & Feng, 2018).
Case problem question include
1. The idea of Sam of making it a global company let it understand various challenges for
business, he being acknowledging the leadership role, and consisting organizational culture that
will align company’s vision do not seem to be not constituted the strategy. The strategy